I have read recently that valuers can give different values for the same property – depending on the purpose of the valuation (eg. divorce, settlemnt, sale, refinance, etc).
Does anyone know what reasons/purposes get higher and lower values?
Regards,
Andrew
itsandrew
Go as far as you can see and you will see further.
If you present a property well and spend money on marketing you can get a better price when you sell. If not a forced sale you also have time to wait for a good offer. Mortgage purpose valuations generally work on the bases of vacant possession – e.g. Empty house without too much emphasis on new paint, good presentation etc.
Banks also require a minimum amount of comparible sales e.g. If your property is a bit different and / or above the rest of the market the valuer will take a conservitive approach if nothing comparible has recently sold.
Real estate agents are often more optimistic. Valiers can be more optimistic if not valuing for mortgage purposes.
I guess think if you were lending your money. Would you want to take a security position based on a conservitive or optimistic valuation?
Banker
You also need to allow for a bit of natural variation between valuers as well. On a $300k property I would not be surprised to have a 5% variation in the value – especially if comparative sales are few and far between as mentioned already. Bear in mind, if you are borrowing money you are at the 'mercy' of whoever does the val for the particular lender too – and some lenders will just use comparable sales (such as a 'desktop valuation) or rates notice CIV figures for lower LVR borrowings. THe only thing I could suggest, assuming you are refinancing is to give a slightly higher owner estimated market value (without being ridiculous) when the lender asks you what you think your place is worth – works occassionally – but only a few grand here and there. I have an exert I will post this week straight from a valuation that explains how figures are arrived at in the event of 'unique' properties or where there are not many recent sales'.
CHeers
Thanks for your comments.
v8ghia, I look forward with interest to see what comments you you have from the valuers.
Andrew
itsandrew
Go as far as you can see and you will see further.
Hi,
In theory a valuer should give you the same figure for any purpose if the property is valued at the same date, asssuming the instructions are always the same (ie: on the basis that the property needs to be sold within 90 days, arms length, willing buyer/seller etc).There is a difference in the time a valuer would spend on a private valuation of your property for family law purpses etc. and a bank valuation for instance, and that extra time may make a difference to the outcome.
A valuation is an opinion on the value of a particlar property, at a specified date, after an inspection and assessment of the property has been conducted.
As for inflating owners estimates with bank instructions, any good valuer will see straight past this and ignore it. Being honest is the best policy.
Agree with Adam however I will add that a property settlement is not a ‘sale’ which is either willing, without undue haste or of the entire property (only of an interest), hence the valuation may not reflect the CMV.
Time spent on a val does not neccessarily mean that all issues are not considered or less accurate however it is a reflection of the use to which the valuation is put – a bank/investor may sue for losses realised due to poor information/advice .
A brief follow up to Scott hoping to clarify valuations for family law/property settlement purposes.
In many instances one or more of the parties may not want to sell the proeprty, but it is almost always valued on the standard basis as previously discussed. The actual owners personal situation or wishes does not effect the instructions, and the property would not be valued under a forced sale situation unless specifically requested (which is highly unusual).
Forced sale valuations are usually used for mortgagee in possession purposes and the like (and even mip jobs usually always also require a valuation figure based on standard instructions in the same report)
Lastly, valuers are liable for the information they provide to clients (both verbal or written), be it a bank, private client or anyone else.
itsandrew wrote:Thanks for your comments.v8ghia, I look forward with interest to see what comments you you have from the valuers.
Andrew
Hi ItsAndrew. I have just posted that val info under a new topic in 'Getting Technical' Hope it helps clarify a few things. Cheers
We are seeing great variations on the same property.
Very hard to settle on loans.
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